The GTA renovation sector is welcoming news that the federal government will offer a tax credit on home improvements.

By: Tracy Hanes Toronto Star, Published on Sat Feb 07 2009
The GTA renovation sector is welcoming news that the federal government will offer a tax credit on home improvements.
The Home Renovation Tax Credit will provide a one-year, temporary 15 per cent tax credit on eligible home renovation expenditures for work performed, or goods acquired, between Jan. 27, 2009 and Feb. 1, 2010. The credit may be claimed on eligible costs after spending $1,000 but no more than $10,000, making the maximum credit $1,350.
“I think it’s great. Of course, we wish it was larger,” says Sandra Baldwin, chair of BILD’s Renovation Council and president of A Lifetime Contractor Ltd. “Still, it’s a boost for our industry sector. I do think it’s an effective incentive.”
A $10,000 renovation project would be fairly modest, she says.
Baldwin says few details have been given about the tax credit so far, and as chair of the renovation council, she hopes to see rules that require a licensed contractor to do the work.
“We’ll be disheartened if it goes to do-it-yourself projects” and all the money ends up being spent at home improvement stores, she says. As well, she is concerned that the funds may go to small, unlicensed contractors who work for cash.
“This is a great opportunity for the government to monitor and effect change in the cash economy,” she says. “I hope the requirement will be in place for contractors to be licensed, to have adequate insurance and liability coverage in place.”
She says the RenoMark program, which is offered in many areas of Canada, offers assurance to consumers that member renovators are licensed, properly skilled, knowledgeable about current building codes and other rules, have proper insurance and meet a strict code of ethics.
“Between the Home Renovation Tax Credit, the First-Time Home Buyers’ Tax Credit, the increase to the RRSP Home Buyers’ Plan withdrawal limits and the enhancements to the ecoEnergy Retrofit program, the feds have clearly acknowledged the strategic importance of construction within the broader economic context,” says Stephen Dupuis, president of BILD. “The Home Renovation Tax Credit promises to spur the most immediate results, because everybody’s got a job jar and now they have an incentive to reach in there and pull out a project.”
Coupled with other grants, it means Ontario homeowners can receive up to $11,350 for a single home improvement project.
They will be allowed to “double dip” from two different programs announced in the federal budget: the Home Renovation Tax Credit and ecoEnergy Retrofit Grant – for maximum benefits of $1,350 and $5,000 respectively – and the provincial government will match the ecoEnergy program with a grant of up to $5,000.
Baldwin says she is “so pleased” the government is continuing with the ecoEnergy grant. “It’s a huge benefit for homeowners to make their homes more efficient.”
The Home Renovation Tax Credit applies to most home projects, while the ecoEnergy program only applies to energy efficiency improvements. Examples of improvements that qualify for both programs include new energy efficient heating or cooling systems, upgrading to an instantaneous hot water heater or energy efficient windows, or increasing insulation.
To be eligible for the ecoEnergy program, homeowners must first have an energy efficiency audit done, which costs around $300 (the government provides a $150 rebate). The renovator documents the aspects of the project that relate to increasing energy efficiency. Upon completion, a second audit determines that the work was done properly and scores the energy efficiency improvement. At this point, the grant application goes in.
“This is a substantial amount of money that is available between now and February 2010,” said Catherine Marshall, vice-president of Suntech Renovations in Oakville, a licensed renovation company. “Those who have been sitting on the fence considering a home improvement project should act this year.”
Although the ecoEnergy program is more complex, Marshall says homeowners shouldn’t hesitate.
“Contractors are becoming more informed about the technical aspects of the program and can help guide homeowners through it.”
Baldwin says the timing of the announcement gives homeowners time to plan a project for spring.
The landscape industry will also benefit from the Home Renovation Tax Credit, as projects such as landscaping, new decks, fences, retaining walls and laying of new sod will be eligible.
Other eligible home improvements include: kitchen, bathroom and basement renovations; new carpet or hardwood floors; adding a new furnace or water heater; interior or exterior painting, and driveway resurfacing.
Examples of ineligible improvements include: furniture and appliance purchases; tool purchases, carpet cleaning and maintenance contracts for furnace cleaning; snow removal and pool cleaning.